Everyone wants to own a home, and while some people may afford to buy one with their own savings, others can only rely on mortgage loans to own a home. Unfortunately, there those people whose incomes cannot allow them to access these loans either. As a lender you can consider such people and while lending to people with high incomes prepares alternative affordable loans for low-income earners. Affordable does not mean that they will not pay for the loans or they will be charged less than others but their repayment periods can be longer so that they can pay little by little until the full amount is cleared. However, other factors that qualify one to get a loan such credit history or credit score must be considered. Here are some of the reasons why you should start providing affordable home loans for potential homeowners.
Low-Price Selling Can Increase Your Profitability
Buying a home is expensive, and since not everyone will afford to buy one, you can decide to provide alternative affordable home loans to low-income earners as long as they qualify to get these loans. Selling affordable loans means that you are likely to attract customers who could not have afforded the expensive home loans. While selling highly-priced loans can increase your profitability, selling more low-priced loans can also bring the same results at the end of the day. For instance, you can have 100 clients buying the highly priced loans each bringing a profit $1000 and also 200 potential homeowners who want to buy low-priced loans each bringing a profit of $400. In the first scenario, you will earn a total of $100,000, and in the second one, you will earn a total of $80,000. The thing is, if you only considered having the highly priced loan, you would only earn a total $100,000 but now together with the affordable loans you have a total of $180,000. All you need to do is ensure that all the borrowers are qualified for the loans they apply for.
You Can Reduce The Risk
Many people would not consider providing loans to low-income earners because they fear that they might not repay the loans. However, just like the Chenoa Fund Loans you only need to have a properly prepared and managed payment plan and better risk management practices. Usually, mortgage loan providers require a borrower to pay a down payment of 20 percent and then the rest is paid as a loan. If you are considering providing affordable home loan you can lower the down payment to around 15 or 10 percent depending on how you evaluate the borrower. This a big risk you are taking and to ensure that you do not end up losing your money, ask the borrower to use the property you are selling to them as collateral. When the borrower pledges his home as collateral, you are safe because you have the permission to put a lien on this home for foreclosure when necessary. In this case, both the lender and the borrower benefit by getting what they want.
Builds Reputation
Everyone loves working with people who are considerate and while business is a bit serious to value consideration, being able to consider low-income earners will attract more people to your business. Even the people who can afford highly-priced loans will be happy to work with you and also refer more business to you. When more people can own a home because you decided to provide alternative affordable home loans, it’s a guarantee you are building your reputation out there. That is why companies such as Chenoa fund says that every American deserves to have a home and having affordable home loans can help to make this happen and everyone ought to love this consideration. However, you must be able to avoid issues such as auctioning clients because of poor loan approvals or losses because of unrecoverable loans.
Everyone wants to own a home, and you as a home loans provider can make this happen by providing affordable loans for low-income earners as long as they prove their credibility. You and your borrower will enjoy the end results.
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